Why the Monetary Mission Should Be Left to the Free Market

October 29, 2023

by David Stockman LewRockwell.com

Current developments on the inflation front should be a stark reminder that discretionary monetary policy is one of the great–if not the greatest— statist cons of our times. At the end of the day, modern central banking is simply a cover story to enable expansion of government activities either by creating unnecessary crises and dislocations or owing to falsely cheap interest rates which enable vast increases in the public debt.

In the present chapter of post-Volcker monetary policy machinations the Fed is allegedly attempting to thread the needle to bring inflation back to the sacrosanct 2.00% “goal” while not sending the economy into the recessionary drink. But in that mission it will positively fail (again).

That’s because it has neither the tools to control the inflation rate with any precision (or any other macro-target), nor even measure it with the accuracy implicit in its policy targets. In this respect, monetary-policy-in-one-country is no more valid than was socialism-in-one-country when Stalin advocated it upon Lenin’s death in 1924.